This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

Shares in Canada’s largest auto parts maker hit a 52-week high Monday after Magna International Inc. reported higher-than-expected quarterly profit and sales.

The Aurora-based company said fourth quarter profit jumped 30 per cent to $458 million as sales in North America soared and cost-cutting in Europe paid off. All figures are in U.S. dollars.

Earnings per share were $2.03 versus $1.49 a year earlier.

Sales rose 14 per cent to $9.17 billion during the three months ended Dec. 31 as the North American market hit a post-recession high in auto industry sales for the year.

“We had a very strong 2013 and have a lot to look forward to,” chief executive officer Don Walker said on a conference all with analysts.

Article Continued Below

The company’s shares gained 5 per cent, up $5.18, to close at $103.75 (Canadian) on the Toronto Stock Exchange after the release. The stock has been on a tear since hitting a 52-week low of $56.13 on April 18, 2013.

Magna shrugged off February’s weaker-than-expected U.S. auto industry sales – also released Monday – noting severe weather was blamed by several major auto makers.

U.S. monthly auto sales were the same as a year ago, at 1.19 million units, for an annualized rate of 15.34 million vehicles. Hefty dealer incentives failed to offset the impact of cold and snowy weather, Reuters.com reported.

Automakers indicated purchases gained momentum in the second half of the month, analyst Carlos Gomes, at Scotiabank, wrote in a note to clients. Rising household wealth and consumer confidence, along with an aging car and truck fleet, should continue to propel U.S. sales, he said.

In Canada, vehicle sales rose 2.4 per cent to 105,693 units, the third best February since 2007, auto analyst Dennis DesRosiers, of DesRosiers Automotive Consultants, wrote in a note to clients.

Magna said it was maintaining its sales and profit outlook for the year, and also raised its quarterly dividend 19 per cent to 38 cents a share, payable as of March 28.

“Magna delivered another very strong quarter,” analyst Steve Arthur, at RBC Dominion Securities, wrote in a note to clients.

The company saw “gradual growth” in North American and European production volume along with “significant” margin improvement in both regions, Arthur noted.

He rates the company “outperform.”

North America accounted for $4.3 billion of quarterly revenue, up 12.2 per cent, while operating margins rose to 10.3 per cent from 9.1 per cent, Magna said.

In Europe, revenue grew 17.1 per cent to $2.59 billion, while the operating profit margin rose to 2.8 per cent from 0.7 per cent a year earlier. The company expects to take an additional $75 million in restructuring charges in Europe this year, down from $89 million in 2013, and less in 2015.

During the conference call, the company revealed it was able to secure some retroactive price increases in Europe and South America, which added about 10 cents a share to its quarterly results, analyst Peter Sklar at BMO Nesbitt Burns, noted in a report to clients. Sklar rates the company’s shares “outperform.”

South America remains challenging, Magna said, particularly Argentina, as inflation boosts costs. Brazil, which faces some of the same challenges, remains promising in the long term, the company said.

The company reported a $21 million fourth quarter loss for on earnings before interest and taxes for the region. Sales were $193 million.

The company continues to make progress in Asia, reporting a solid 5.8 per cent operating margin on $433 million in sales. It was the first quarter the company had split Asia from the “rest of world” – chiefly South America -- into distinct segments.

For the full year, Magna reported total sales of $34.84 billion, a 13 per cent increase over 2012. Profit rose 8.9 per cent to $1.561 billion.

The company made minor adjustments to its outlook for 2014, raising its production forecast for Europe.

The company continues to expect its sales for 2014 will come in between $33.8 billion and $35.5 billion.

The auto parts giant, with 316 factories around the world, also said it continues to expect to spend $1.4 billion on capital projects.

More from the Toronto Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com